Sangjin Jeong, Head of Korea Investment & Securities Asset Management Division, "Major Uptrend Possible Next Year"

[Relay Interview] Korea Investment Trust Management
Concerns Over Omicron Impact but
High Possibility of Stock Market Rise Ahead

Sangjin Jeong, Head of Equity Management Division, Korea Investment Trust Management

[Asia Economy Reporter Junho Hwang] "Omicron is a factor that calls for a relaxation cycle rather than tightening."

Sangjin Jeong, Head of Equity Management at Korea Investment Trust Management, stated on the 2nd regarding next year's stock market outlook, "As supply chain bottlenecks gradually resolve, inflation is more likely to decrease, and with liquidity maintained, it is possible to trigger a 'major bull market' again."

There are concerns about shutdowns in various countries due to the spread of Omicron. However, looking at the responses of countries to COVID-19 so far, the possibility of additional liquidity injections is actually higher. This strengthens the 'low interest rate asset inflation' structure. Accordingly, contrary to the current stock market outlook, Jeong predicts that a strong market could be produced.

However, regarding the return of foreign investors who are leading the rise in the domestic stock market, he analyzed, "Our country's economy needs to be relatively better than foreign countries, but fundamentally, it is not an easy situation for them to turn into 'buyers'." Nevertheless, he forecasted, "In a situation with abundant liquidity like now, the stock market can be driven up by individual investors alone without foreigners," and "It is possible to produce a bull market led by individuals next year."

As a variable, he pointed to "a situation where inflation rises higher than now." Jeong said, "If inflation rises further, an economic crisis similar to the stagflation of the 1970s could occur," and "In such a case, the Federal Reserve, which determines the direction of U.S. monetary policy, would not be able to perform its role, so inflation will be stabilized before that." He added, "Even if interest rates rise, with infrastructure investments on the scale of 1 trillion dollars starting, the U.S. economy next year will not be worse than now."

Additionally, he warned, "We need to be cautious about the situation where funds inflow into existing large-cap stocks decrease due to large initial public offerings (IPOs) continuing from this year," and forecasted, "Next year, large IPOs such as LG Energy Solution are scheduled, but since institutions like the National Pension Service are not in a position to increase their domestic stock holdings, they will have to sell existing large-cap stocks, which will affect stock prices."

As leading sectors, he said, "Semiconductors, chemicals, and services are expected to perform well," and "These are sectors where concerns about next year's earnings have already been reflected." Based on this judgment, he recommended the 'Korea Investment Navigator Fund,' which invests in sectors with strong fundamentals and long-term growth potential. As of the 1st, this fund achieved a 25.16% return over the past year, outperforming the benchmark index by 15.92 percentage points.